Palo Alto Networks inks $173M deal to acquire cloud security startup RedLock

Palo Alto Networks Inc. today announced that it has agreed to buy RedLock Inc., a competitor focused on securing cloud environments, in an all-cash deal worth $173 million.

The purchase is the latest in a series of nine-figure acquisitions that the network protection giant has made this year. In April, Palo Alto Networks shelled out $300 million for a company called Evident.io Inc. that also focused on cloud security. Earlier, it acquired Israeli endpoint protection startup Secdo Ltd. for $100 million.

Menlo Park, California-based RedLock launched in 2015, the same year as Secdo, and has developed a threat detection service that supports all the major public cloud platforms. The offering uses artificial intelligence to scan companies’ deployments for signs of malicious activity.

RedLock’s algorithms collect data about how a cloud environment is configured and correlate the information with various other factors, such as network traffic to the application inside. When the service detects a breach, it can respond automatically by issuing commands to a company’s other security tools.

“Say a user creates a security group within an organization, but accidentally leaves it open,” Chris Morosco, a product marketing  director at Palo Alto Networks, wrote in a blog post. “RedLock will discover it, see that it is associated with a VM [virtual machine, a computer emulated in software] running MongoDB, and determine that the database is receiving Internet traffic from a known malicious IP address. What happens next is the database is automatically moved to a private security group – remediating the risk.”

Judging from the acquisition’s value, Palo Alto Networks was apparently quite impressed with RedLock’s capabilities. The $173 million price tag represents a massive premium over the $12 million that RedLock has raised from investors, particularly given that it exited stealth mode only last year and likely has a limited customer base.

Palo Alto Networks expects to wrap up the acquisition by the end of the month. The company will integrate RedLock with the software it acquired as part of Evident.io, which focused on helping organizations check that their cloud environments’ security settings comply with data regulations. In his blog post, Morosco said that customers can expect a combined offering to hit the market early next year.

Palo Alto Networks said it has some 6,000 cloud customers globally. The company, which is best known as a maker of firewalls for on-premises corporate networks, has responded to the rise of the public cloud with a combination of organic product development initiatives and acquisitions. Its earlier deals included the 2017 purchase of LightCyber Inc. for $105 million and the acquisition of  software-as-a-service security specialist CirroSecure in 2015.

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